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Working Spouses and their Railroad Retirement Thumbnail

Working Spouses and their Railroad Retirement

Tier 1 Tier 2 Spouse Annuity Retirement


If your spouse is working or has worked, understand the strategies for them to maximize their Railroad Retirement,

Welcome everyone to the Highball Advisors railroad retirement whiteboard. My name is John McNamara, of Highball Advisor. And today we're going to talk about spousal annuities and in particular working spouses. Okay. So two income family, want to understand how that's going to affect your Railroad Retirement annuity in, uh, in retirement. So I'm going to walk through it. Um, I am not going to do a lot of texts. Uh, I'm just going to work through an example because I think that might be a good way to illustrate, uh, the situation. So let's say we have a, railroader retiring at full retirement age. Okay. And their tier one might be $2,000 and their tier two is a thousand dollars. Now remember, okay. I said full retirement age. So if you don't have, if you're not retiring at full retirement age, uh, reductions do apply this case. We're going to just keep it simple and go full retirement age.

So $2,00O/ $1,000, now we have a spouse. What are they entitled to? So they're entitled to a thousand dollars, which is 50% of the tier one and 45% of the tier two, $450, Their entitled at their full retirement age. Not a, this railroad is full retirement age, their full retirement age. Very important. Okay. So that's straightforward. Okay. Now let's say we have a working spouse and this individual has made significant income and they're entitled on their own to social security of $2,000. Right? So, uh, you know, pretty much matches the railroad or there. So they were like, well, I don't want a thousand dollar spouse annuity I want my $2,000. Well, at their full retirement age, they will get their $2,000. It's just shown, they'll collect it through the railroad retirement board. They get the thousand dollars from the spousal annuity. And then they'll get a thousand dollars from social security for the total of the $2,000 that they were due.

It's important to remember. They are not getting $3,000 of a thousand spousal annuity. Plus there's 2000 social security that's you don't get $3,000, 2000. That's the limit. They also get the working spouse. Uh, this individual also gets the tier two of $450. All right. So that's how that would work. Okay. At full retirement age, now let's look at a, a possible strategy here. That might be interesting for some people it's, let's say a 30, 30 year, uh, uh, individual railroader retire. They could do something where this is a spousal strategy. Uh, could take your spousal annuity at 60, right. Which is a full retirement age for the tier one. So they would get the thousand. They could take the a thousand and the 1450. Okay. And then at 70 switch. Okay. Get rid of their tier one. So to speak and collect social security. And then the $450, however, what's nice about social security is you get those delayed retirement benefits.

So from 67 to 70, they're collecting another 8%. So in say of $2,000 a month, that they're entitled to, they would actually at 70, by switching to this strategy, they would be entitled to $2480 a month. Okay. Going forward, plus the $450, it's something to think about. There's some individuals that might be worthwhile depending upon what their social security payments are gonna be. Look like. Uh, it's just something that's out there, uh, for individuals. So, uh, feel free to reach out to me, go through my boarding for railroad retirement assessment. It's really helpful for individuals closing in on railroad retirement to understand, you know, simple strategies like this and all those other pieces of the puzzle that, uh, helped for a great railroad retirement. So sign up for that, uh, as always, please subscribe to my YouTube channel. I appreciate that, you know, click on the bell for notifications, thumbs up, like all those things. That's great. And the meantime, everyone, until I see you next time, please stay safe, stay on track and take care.


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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved.from Highball Advisors, and all rights are reserved.